Financial watchdog to target moneylenders

UNREGULATED moneylenders are to come under scrutiny following the establishment yesterday of a new financial watchdog.

The Financial Services Ombudsman is to be given the power to investigate complaints against a group of moneylenders that are currently unsupervised.

This group of money lenders was put in the spotlight last February following raids on one such institution as part of an alleged IRA money-laundering investigation.

The offices of Chesterton Finance in Ballincollig, Co Cork, were searched on February 17 during a nationwide garda operation.

A follow-up search on the house of moneylender Ted Cunningham, the owner of Chesterton Finance, resulted in the discovery of £2.3m sterling in a compost bin. Chesterton Finance is one of an unknown number of “non-status” moneylenders, which lend money from their own resources. The loans are secured on a customer’s assets, such as property, rather than deposits.

These moneylenders, also known as mortgage lenders, are specifically exempted under the Consumer Credit Act from regulation.

There is no record on how many companies there are or how much money they loan out.

Now the new Financial Services Ombudsman Joe Meade will be able to investigate complaints from customers of these companies.

“Legislation provides that the minister can make regulations authorising me to investigate complaints against non-status moneylenders,” said Mr Meade.

“They have not yet been made, but the intention is to make them.”

Mr Meade said he will review complaints made to him and can award damages of up to €250,000.

“My view is that everybody who has any transaction of a financial nature there has to be some redress scheme for them,” he said.

Currently, under the Consumer Credit Act, the Irish Financial Services Regulatory Authority (IFRSA) has no role in supervising mortgage lenders.

A spokeswoman for Finance Minister Brian Cowen said he did not, at present, have evidence to suggest such an extension was justified.

However, the minister was “open to making suitable amendments to the law” if such evidence emerged from the IFSRA or the ombudsman.

The Financial Services Ombudsman can be contacted on 01-6130892